As a general recommendation, it is essential not to finance with a credit card, that is, to pay the total and then look for another type of financing since the rates paid on the remaining balance when only the minimum is cancelled are among the highest of the market, ” payday loans Leeds such a firm
What is a personal loan
A personal loan is a loan of money that you receive and that you have to return with interest during a certain period of time through monthly instalments. The interest rate that the financial institution applies to us, along with the time are the most important variables to know what economic burden we are facing for the repayment of the loan that we need.
In addition to the loans, which are returned in monthly instalments in a set period of time, identical to the mortgage loans but with the sole responsibility of the person signing them and potential guarantors, there are also personal loans. The credits can have an identical operation to the loans if the debtor returns them by means of monthly instalments, but the difference is that, based on what is established in the contract, the client can make subsequent money dispositions. It would work in a very similar way to the credit available on a credit card.
How to choose the cheapest loan
To begin with, if we have the doubt between choosing a loan or a credit card to request money, we should not doubt it, a personal loan is much cheaper. A loan has an interest rate that generally ranges between 8% -12%. On the contrary, the interest rate on credit cards is much higher, between 18% -25%. In the matter of commissions, a personal loan has opening, study and partial or total repayment commissions, generally. The best thing is that the commission is 0%, in any case, it should not exceed 3%. A personal loan with 1% commission is at the market average.
We must not leave aside the cost of late interest as expenses for the return of a receipt in case of default. In this case, it can make the cost of a loan much more expensive. In the case that we want to negotiate a reduction in the cost of the loan with our financial institution, there are two main fronts: payment guarantees and the link to the bank.
The higher the solvency of the client, the easier it is for the bank to access a reduction in the interest rate or loan commissions. We can increase the guarantees of payment through properties or other assets or through the figure of a guarantor. Another way to protect the entity from possible defaults or unforeseen events without unbalancing the client’s economy in case of default is insured or protected payment plans.